Dolan v. Welch

• Decision Date: 30 March 1984
• Docket Number: No. 82-2283,82-2283
• Citation: 462 N.E.2d 794,123 Ill.App.3d 277,78 Ill.Dec. 675
• Parties: , 78 Ill.Dec. 675 Ruth DOLAN, Administrator of the Estate of Daniel M. Dolan, Dec., Plaintiff- Appellant, v. Leo F. WELCH, Administrator of the Estate of Leo V. Welch, Dec., et al., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 794

462 N.E.2d 794

123 Ill.App.3d 277, 78 Ill.Dec. 675

Ruth DOLAN, Administrator of the Estate of Daniel M. Dolan Dec., Plaintiff- Appellant, v. Leo F. WELCH, Administrator of the Estate of Leo V. Welch Dec., et al., Defendants-Appellees.

No. 82-2283.

Appellate Court of Illinois First District, Third Division.

March 30, 1984.

Bradley, Bradley & Nedderman, Chicago (Thomas F. Nedderman, Chicago, of counsel), for plaintiff-appellant.

Walter M. Ketchum, Ltd., Chicago (Jonathan K. Gray, Chicago, of counsel), for defendants-appellees.

RIZZI, Presiding Justice:

Plaintiff, Ruth Dolan, administrator of the estate of Daniel M. Dolan, sought a declaratory judgment that an insurance policy issued by defendant Farmers Insurance Group to defendant Leo F. Welch, administrator of the estate of Leo V. Welch, and an insurance policy issued by defendant Mid-Century Insurance Exchange, an affiliate of Farmers, to Leo V. Welch covered a car accident in which Daniel M. Dolan and Leo V. Welch were killed. Following a bench trial, the court found that the policy issued to Leo F. Welch provided no coverage for the accident. Plaintiff appeals. We reverse.

At trial, the evidence showed that on July 5, 1979, Daniel M. Dolan and Leo V. Welch, both 17 years old, were killed in a collision involving a 1964 Corvair driven by Welch in which Dolan was a passenger. The Corvair was purchased on June 30, 1979. Leo V. Welch's parents, Mr. and Mrs. Leo F. Welch, paid $200 of the $400 price of the Corvair and received a bill of sale which Mrs. Welch signed at the request of the seller. The $200 was a loan to Leo V. which he was supposed to repay. Title was going to be registered in the name of Mr. Welch, but Leo V. was to be responsible for maintaining the car. Mrs. Welch testified that she believed the Corvair was her son's car. However, Mr. and Mrs. Welch believed that Leo V. could not legally own a car until he was 18 years old. Mr. and Mrs. Welch claimed the Corvair as a casualty loss on their 1979 income tax return.

Prior to the purchase of the Corvair, in early June 1979, Mr. Welch obtained the title to a 1969 Ford Fairlane which he had purchased about a year earlier. Mr. Welch gave the Fairlane to Leo V. as his car to drive and maintain. Leo V. was supposed to pay his parents for the Fairlane. When Leo V. started driving the Fairlane, either Mrs. Welch or Leo V. called Weldon Brown, the agent who handled the family's insurance, and discussed insurance for the Fairlane. On the insurance application Brown listed Mr. Welch as the registered owner. On the basis of the application, Mid-Century issued a policy dated June 4, 1979, with $10,000 liability coverage, to Leo V.

On June 30, 1979, Brown processed an application for change of insurance on the basis of a phone call from either Mrs. Welch or her son. On this application Brown listed Leo V. as the registered owner. The change consisted of describing the 1964 Corvair as a replacement vehicle for the Fairlane. No member of the Welch family ever signed the application for change, and since the policy was cancelled the same day as the accident, it is possible that a face sheet formally endorsing the change never issued. However, Brown had authority to bind the company, a signature was on the original application and the absence of a formal endorsement would not affect the validity of the application for change.

At the time of the accident, Mr. Welch was the named insured on a Farmer's policy with $100,000 liability coverage. A 1978 Club-Wagon was the described vehicle in that policy. The policy provided for the payment of damages due to bodily injury and property damage "arising out of the ownership, maintenance or use, including loading or unloading, of an automobile" as defined in the policy. The policy defined a "described automobile" as "the automobile described in the Declarations and includes a substitute automobile and/or newly acquired automobile." A "newly acquired automobile" was defined as

an automobile, ownership of which is acquired by the named insured, * * * (b) if it is an additional automobile and the Company insures all automobiles owned by the named insured on the day of such acquisition and the named insured notifies the Company within thirty days thereafter; but the insurance with respect to the newly acquired automobile does not apply to any loss against which the named insured has other collectible insurance. The named insured shall pay any additional premium required.

Plaintiff argues that the Corvair was a newly acquired automobile within the meaning of the Farmers policy. Specifically, plaintiff maintains that the term "ownership" in the newly acquired automobile provision is ambiguous and must therefore be construed in favor of the insured. Plaintiff asserts that when "ownership" is so construed, it is evident that Mr. and Mrs. Welch had an ownership interest in the Corvair requiring coverage under the newly acquired automobile provision for additional automobiles. We agree.

A policy provision is ambiguous if, considering the policy as a whole (see United States Fire Insurance Co. v. Schnackenberg, 88 Ill.2d 1, 5, 57 Ill.Dec. 840, 842, 429 N.E.2d 1203, 1205 (1981)), it is subject to more than one reasonable interpretation (State Farm Fire & Casualty Co. v. Moore, 103 Ill.App.3d 250, 256, 58 Ill.Dec. 609, 614, 430 N.E.2d 641, 646 (1981)). Here, the policy defines a newly acquired automobile as an automobile, "ownership of which is acquired by the named insured" as a replacement or an additional automobile. "Ownership" is not defined in the policy. Though we are unaware of an Illinois reviewing court which has specifically determined that the term "ownership" is ambiguous in the context of an automobile liability policy, courts of other...